United States

Department

of Agriculture

www.ers.usda.gov

Electronic Outlook Report from the Economic Research Service

LDP-M-105-01

March 2003

Pork Policies in Japan

Abstract

Japan’s policies in the pork sector attempt to support producers’ incomes while keeping

market prices stable. Regional pork production funds provide deficiency payments to

farmers according to rules that vary by prefecture. Funding comes from producer checkoff payments and from regional and national governments. The national government also

subsidizes disaster insurance premiums. At the border, imports confront the gate price

system, which imposes a minimum import price on pork shipments. For shipments valued below the minimum price, importers must pay the difference between the shipment’s

value and the minimum price. The system taxes the importation of lower-valued pork

cuts. Pork can only be imported from countries that are free of foot-and-mouth and certain other diseases. Pork producer prices in Japan are roughly twice the U.S. level, partly

because of the gate price system. Consumer prices are also significantly higher than in

the United States. 

Keywords: Japan, pork, policies, domestic support, trade, trade liberalization,

sanitary regulations.

Acknowledgments

The authors gratefully acknowledge the reviews of Leland Southard, David Skully,

Mildred Haley, Praveen Dixit, Janet Perry, and Joy Harwood of ERS; David Leishman 

and Richard Battaglia of FAS; Shayle Shagam and Joel Greene of the World Agricultural

Outlook Board; Michael Zerr of the Meat Export Federation, and Tom Wahl of

Washington State University. Excellent support was provided by the editor, Martha Evans,

and by the designer, Wynnice Pointer-Napper.

Kakuyu Obara, John Dyck, and Jim Stout1

1 Kakuyu Obara works in the Foreign Agricultural Service (FAS) and John Dyck and Jim Stout work in the

Economic Research Service (ERS). This article is part of a project jointly conducted by the FAS Tokyo

office and ERS.
Japan is one of the leading agricultural importing

nations in the world. This article is one in a series

examining Japan’s policies that protect and regulate its

agricultural markets. These policies are of special interest because they are subject to review in the current

round of global trade negotiations conducted by the

World Trade Organization (WTO). 

Japan is the world’s largest importer of pork in most

years, and domestic production, based on imported

feedstuffs, is also important. Consumption of pork has

been stable in recent years, but production has been

declining gradually since 1989, leading to increasing

imports (fig. 1).

Pork, the leading meat consumed in Japan, competes

with beef and with other protein sources for consumer

attention. In recent years, consumption has been relatively stable at about 2.2 million tons (carcass-weight

equivalent), or 10.2 kg per person annually (boneless

weight—about 22.5 lb). Fresh or chilled pork is purchased by Japanese households for cooking at home.

This kind of consumption has been declining as consumers have increasingly turned to buying food away

from home, or to buying processed products that offer

convenience in preparation. The restaurant sector is a

major consumer of frozen and chilled pork for use in

entrees. A large industry also manufactures hams and

other processed products, using frozen pork as the

raw material. 

In 2000, the value of Japan’s domestic hog output was

estimated at over 465 billion yen ($4.34 billion, a little

over 5 percent of total agricultural output). This value

declined during the 1990s from an output value of over

640 billion yen in 1991.2 Over the same period, the volume of domestic pork produced fell by over 13 percent.

The decline was interrupted in 1997, as the sudden withdrawal of exports from Taiwan, formerly Japan’s leading

foreign source of pork, allowed domestic prices to rise

and stimulated production.3 However, by 2001, production was again below the level of 1996, and further

declines can be expected, since Japan’s pork sector is

handicapped in competition against pork imports by the

cost of transporting imported feedstuffs, relatively high

labor costs, and problems in finding sites for large hog

farms and large processing plants that could achieve

economies of size. In 2001, imports represented 44 percent of the total quantity marketed in Japan.4

2 Economic Research Service, USDA

Introduction

Figure 1

Japan: Pork production, supply, and demand

1,000 tons

Source: USDA, PS&D.

Production

Stocks

Imports

Consumption

1961 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 2001

0

500

1,000

1,500

2,000

2,500

2 Ministry of Agriculture, Forestry and Fisheries. Statistical

Yearbook, 1999-2000, p. 555.

3 Taiwan’s exports ceased after a serious outbreak of foot-andmouth disease.

4 Agriculture & Livestock Industries Corporation, Sept. 2002, p. 15.
The Aggregate Measurement of Support (AMS) and

the Producer Support Estimate (PSE) are two measurements of the overall support received by farmers as a

result of government actions. Each year, Japan’s

Government calculates the AMS as part of its report to

the WTO on domestic support for agriculture (see box

How Japan Notifies Its Domestic Policies on Pork to

the WTO). Japan’s Government support for agriculture

is also estimated by the Organization for Economic

Cooperation and Development (OECD) each year as it

calculates the PSE (fig. 2). For 1999, the last year

available, Japan calculated the pork AMS as 265 billion yen ($2.33 billion). Constituting 35 percent of the

total AMS, this was the largest commodity subsidy

reported by Japan in 1999. The OECD estimated the

PSE at 236 billion yen in 1999 ($2.08 billion) and 252

billion yen ($2.35 billion) in 2000. What do these

large numbers measure?

These estimates of support for pork use different methods, but both are based on the concept of support for

market prices. Market price support involves government intervention that raises prices in a marketplace,

affecting both buyers and sellers. Japan annually sets a

standard stabilization price for pork (authorized by the

Law Concerning Stabilization of Livestock Prices)

(appendix table 1). When market prices fall below the

standard stabilization price, the government is authorized to take actions which would raise the market

price. These have included purchasing pork (in order

to reduce supply and thus raise prices), subsidizing the

disposal of breeding sows, and subsidizing the storage

of frozen pork. In practice, such actions are not common. The main government domestic policy support to

hog farmers appears to come through the Regional

Pork Production Stabilization Fund (see below), which

supports producer returns, but does not directly affect

the market price for pork. Nevertheless, because Japan

does have an administered market price (the standard

stabilization price) for pork, and sometimes acts to

support it, both Japan and the OECD base their estimates of support on this price. 

Japan calculates market price support in the AMS as

the difference between the standard stabilization price

(365 yen/kg in Japanese fiscal year 2001) and a fixed

historical international reference price—an internal

European Union price of pork in 1986-88. This price

difference is multiplied times total Japanese pork production to arrive at a measurement of market price

support, which constitutes the AMS. The OECD calculates market price support in the PSE as the difference

between the standard stabilization price and a current

international reference price—the U.S. pork cut-out

price plus an estimate of transportation cost from the

United States to Japan (fig. 3). 

Thus, both the AMS and the PSE use a price wedge

between an internal Japanese price and an international price to calculate market price support (fig. 4).

These estimates indicate that prices in Japan are much

higher than in the world marketplace. However, the

estimates of the value of market price support are not

closely related to government expenditures to support

prices, which are much lower. Part of the roughly $2

billion annual market price support for pork in Japan is

caused by border measures that tend to raise the market price, rather than stemming from support provided

by domestic policies. Actual government expenditures

to support pork production are considerably less than

$2 billion. The following sections discuss domestic

policies, paid for by taxes, and then border measures,

which are paid for by consumers.

Economic Research Service, USDA 3

High Levels of Support for Pork Reflect Border Protection and 

Domestic Policies

Figure 2

Japan: PSE and AMS for pork

Bil. yen

Sources: WTO and OECD.

AMS

PSE

1986 88 90 92 94 96 98 2000

0

100

200

300

400
4 Economic Research Service, USDA

Policy Box Justification

Animal health control Green Benefits to agriculture, not involving direct 

payments to farmers or price support.

General services including Green Benefits to agriculture, not involving direct 

infrastructural services; payments to farmers or price support.

extension and advisory services 

on technologies; information 

services for promotion of livestock 

products

Payments for slaughtering sows Green To avoid overproduction of pork.

Production, processing, and Green Infrastructural services for market facilities:

marketing subsidies provision or construction of market facilities.

Agricultural loans for structural adjustment:

interest concessions.

Market price support Amber Price stabilization.

Disaster insurance subsidies Green and amber1 Green: Payments for relief from natural 

disasters: subsidies on premiums of agricultural 

insurance for production loss more than 30 

percent of average levels.

Amber: Subsidies on premiums of agricultural 

insurance for production loss less than 30 

percent of average levels.

1Premium payments for insurance coverage for losses less than 30 percent for all commodities (not just pork) were 22.2 billion yen ($195

million) in 1999, which was .2 percent of the value of Japan’s total agricultural output, and thus considered de minimis and not counted as

part of Japan’s aggregate AMS because the payments were less than 5 percent of the value of production.

Source: Notification concerning domestic support commitments reported by the Government of Japan to the WTO for fiscal year 1999.

G/AG/N/JPN/72, Feb.19, 2002.

How Japan Notifies Its Domestic Policies on Pork to the WTO

Figure 4

Japan: Market price support for pork

Bil. yen

Sources: WTO and OECD.

From AMS

From PSE

1995 96 97 98 99 2000

150

200

250

300

350

Figure 3

Japan: Producer and reference prices for pork

1,000 yen per metric ton

Source: OECD.

Japan producer price (farmgate)

U.S. pork price, plus transportation

1986 88 90 92 94 96 98 2000

0

100

200

300

400

500
Compensation to producers for price declines. The

Regional Pork Production Stabilization Fund is a

regional program run voluntarily by pork fund associations in major pork-producing prefectures. The two

primary sources of funds are farmers’ check-off payments per animal and a prefectural farm sector promotion budget from the local government’s general

account. The amount paid per hog by a farmer (the

check-off) and the local government contribution differ

by prefecture. The program is actually a deficiency

payment plan run at the prefectural level, with voluntary participation. A farmer can sign up any number of

hogs for coverage, not necessarily the whole herd. 

Each prefecture sets a guaranteed price (the support

price) for the fiscal year.5 The support price levels differ by prefecture. When the monthly average wholesale pork carcass transaction prices traded in each prefecture fall below the prefectural guaranteed price

level, compensation is paid to eligible hog farmers

from the prefectural fund. The difference between the

guaranteed price and the market average price differs

by prefecture, and the extent to which the difference is

covered by the program also varies by prefecture. A

hog farmer can be paid a portion or the full difference

of the deficiency coverage depending on the prefectural association to which he belongs. For example, the

guaranteed price could be 380 yen/kg in one prefecture and 450 yen/kg in another. One prefecture may

issue a fixed amount of disbursement, say up to 25

yen/kg. Another prefecture may pay the full amount of

the difference between the prefectural guaranteed price

and the average market price, with no limit.

At the national level, the Ministry of Agriculture,

Forestry and Fisheries (MAFF) has a Regional Pig

Production Stabilization Fund Project to supplement

the prefectural funds when they are exhausted. The

MAFF fund uses a budget allocated for a 3-year period. Large disbursements from the national fund

become necessary when the market prices of pork carcasses are depressed severely for a prolonged period of

time. Such disbursements were made in the past, mostly during months in the fall and winter seasons when

domestic pork production peaks. 

A total of 5 billion yen ($41 million) is earmarked for

this MAFF project for the 3 fiscal years, 2001-2003.

National criteria trigger the ability to draw on the

fund. MAFF uses the nationally set standard price (the

national floor) as a criterion to support the prefectural

funds. The fund was not used during Japan fiscal year

2001 (JFY2001), but its use would have been allowed

if the combined monthly average of Tokyo and Osaka

wholesale carcass prices fell below the national standard price of 400 yen/kg for the standard carcass

weight of 75 kg. 

Insurance. Swine are eligible for a government-supported hazard insurance plan that applies to death on the

farm, disease, and injuries. Farmers choose the level of

coverage for losses, with the maximum level 80 percent

of the value of the loss, and the minimum level ranging

from 20 to 40 percent of loss, depending on the local

government. The national government pays 40 percent

of the premium for the insurance policy, and farmers

pay the remaining 60 percent. Local associations or

municipal governments pay out the indemnities. The

liability of these associations/municipalities is covered

by reinsurance that is shared 50 percent by the national

government, 30 percent by a prefectural federation of

insurance associations, and 20 percent by the local association or municipality. In case of an extraordinary

event, such as a disease epidemic, the national government assumes the indemnities that the local groups cannot pay. 

In 1998, the national government paid 965 million yen

($7.37 million) in insurance premium subsidies for hogs

and boars. Farmers were indemnified for about 115,000

dead or disabled hogs and boars and for about 40,000

injured or diseased boars in that year, with a total

indemnity value of 2.146 billion yen ($16 million).

Economic Research Service, USDA 5

Domestic Policies

5 Japan’s fiscal year is April-March.
Tariffs. The tariff on fresh, chilled, or frozen meat of

swine is 4.3 percent. Tariffs on offals are 8.5 percent,

and tariffs on pork preparations range from 0 to 21.3

percent (table 1). Thus, tariffs alone are not prohibitive, and pork tariffs are lower than those for beef and

poultry meat.6

Gate price system. The gate price system is the main

barrier to pork imports. The gate price system began in

1995 as a mechanism negotiated in the Uruguay

Round (UR) to replace Japan’s previous variable levy

system for pork.7 However, its operation still strongly

resembles a variable levy. If pork imports, priced at

entry into Japan, are valued at or above the gate price,

then they pay only the simple tariff (4.3 percent in the

case of fresh, chilled, or frozen meat). If their value is

lower than the gate price, the importer must pay the

difference between the import value and the gate price

as a duty, in addition to the tariff applied at the gate

price value. In practice, the gate price is compared

with the average value of the invoice on a shipment of

pork, which is usually one or more containers of pork.

6 Economic Research Service, USDA

Border Measures

Table 1—Japan: Pork tariffs and gate prices, 2002

HS tariff lines Product Tariff Note

0203 Meat of swine: Fresh, chilled, or frozen 4.3 GP

Offal

0206.30.091 Internal organs of swine, fresh or chilled 8.5

0206.30.093 Other edible offal of swine, fresh or chilled 4.3 GP

0206.41.090 Frozen swine livers 8.5

0206.49.091 Internal organs of swine, frozen 8.5

0206.49.093, .092, .094 Other edible offal of swine, fresh or chilled 4.3 GP

Salted, dried, or smoked meat

0210.11 Salted, dried, or smoked hams and shoulders 

and cuts thereof, with bone in 8.5 GP

0210.12 Salted, dried, or smoked bellies and cuts thereof 8.5 GP

0210.19 Other salted, dried, or smoked meat of swine 8.5 GP

0210.90.011, .019 Other salted, dried, or smoked products of swine 8.5 GP

1601.00 Sausages 10

Other prepared or preserved meat, offal, or blood

1602.10 Homogenized preparations 21.3

1602.20 Livers 21.3

1602.41.011, .019 Hams and cuts thereof 8.5 GP

1602.41.090 Hams and cuts thereof 20

1602.42.011, .019 Shoulders and cuts thereof, sterilized 8.5 GP

1602.42.090 Shoulders and cuts thereof, sterilized 20

1602.49.100 Boiled guts, bladders, or stomachs 0

Gate prices Yen/kg US$/kg1 US$/lb1

Carcasses and half carcasses 393 3.25 1.47

Cuts with bone in 524 4.33 1.97

Boneless cuts 524 4.33 1.97

Edible offal, except fresh/chilled internal organs 

and frozen livers 524 4.33 1.97

Hams and cuts thereof 897.59 7.42 3.37

Shoulders and cuts thereof 897.59 7.42 3.37

Notes: This is not an authoritative source for Japan’s tariffs. For that, refer to Customs Tariff Schedules of Japan. GP indicates that the tariff

lines in that row are subject to the gate price system. HS stands for Harmonized System.

1 Converted from yen/kg using the average 2001 exchange rate of 120.96 yen/US$.

Sources: Japan Tariff Association, Customs Tariff Schedules of Japan, 2002. Japan Uruguay Round Country Schedule, 1995.

6 The tariff on beef is 38.5 percent. Tariffs on poultry meat range

between 8.5 and 11.9 percent, depending on which cut is imported. 7 For an analysis of the variable levy system, see Bredahl et al.
Applying the gate price to a shipment allows traders to

mix pork cuts so that no levy is assessed except the

4.3-percent tariff. For example, low-priced bellies can

be mixed with high-priced loins until the average value

of the shipment is equal to the gate price.

Under the old variable levy system, the gate price for

imports was linked to the standard stabilization price

for domestic carcasses (appendix table 1). Since 1995,

there has been no formal linkage. Gate price levels

were negotiated in the UR and reductions made from a

starting level (table 2). The final UR reductions were

made April 1, 2000, and the gate price will remain at

that level in the future, unless there is a safeguard

action (see below) or a new international agreement to

change the level, or the gate price system, is reached.

For carcasses, the gate price is 393 yen/kg ($1.47/lb in

2001) (table 1). For unprocessed cuts and offals, the

gate price is 524 yen/kg ($1.97/lb), and for hams, the

gate price is 897.59 yen/kg ($3.37/lb).

The standard import price (SIP) is defined as the value

of a kilogram of pork imported at the gate price,

including the tariff (currently 4.3 percent). It is calculated as the gate price multiplied by 1.043, so that the

normal value (with no safeguards) stands at 547

yen/kg ($2.05/lb in 2001) for pork cuts and certain

types of offals (table 2). 

Sausages, livers and certain other offals, and some

pork preparations are not subject to the gate price 

system (table 1).

Safeguards. In the case of pork, Japan’s Government

has access to three different WTO measures that allow

it to temporarily increase barriers to imports. One

mechanism is contained in the UR Agreement on

Safeguards,8 which Japan has not used for pork. A second mechanism is the provision on special safeguards

in the Agreement on Agriculture (article 5).9 It was

used in 1997. A third mechanism is defined in a 1995

bilateral agreement between the United States and

Japan which became part of the overall UR agreement,

and applies equally to all WTO members exporting

pork to Japan. It was used in 1995, 1996, 1997, 2001,

and 2002 and is specific to pork imports (table 2 and

appendix table 2).

The UR Agreement on Agriculture (URAA) allowed

any member country the one-time opportunity to designate individual tariff lines as eligible for special safeguards, if the commodity involved was previously subject to a nontariff barrier which was being converted to

Economic Research Service, USDA 7

Table 2—Japan's gate price system and tariff for imported pork cuts under the Uruguay Round Agreement

Unit Japan fiscal year (April - March)

1994 1995 1996 1997 1998 1999 2000 2001 2002

With no safeguard in effect:

Gate price yen/kg 596.83 584.49 572.55 560.42 548.28 536.14 524.00 524.00 524.00

Standard import price yen/kg 626.67 613.34 600.03 586.76 572.95 559.73 546.53 546.53 546.53

Tariff percent 5.0 4.9 4.8 4.71 4.5 4.4 4.3 4.3 4.3

With gate-price safeguard (SG) in effect:

Gate price yen/kg 723.83 709.67 695.50 681.33 667.17 653.00 653.00 653.00

Standard import price yen/kg 759.30 743.73 728.19 711.99 696.53 681.08 681.08 681.08

Tariff percent 4.9 4.8 4.7 4.5 4.4 4.3 4.3 4.3

With special safeguard (SSG) in effect:

Gate price yen/kg 584.49 572.55 560.42 548.28 536.14 524.00 524.00 524.00

Standard import price yen/kg 662.69 609.19 595.73 581.18 567.77 553.87 553.87 553.87

Tariff percent 6.5 6.4 6.3 6.0 5.9 5.7 5.7 5.7

With both SG and SSG in effect:

Gate price yen/kg 723.83 709.67 695.50 681.33 667.17 653.00 653.00 653.00

Standard import price yen/kg 770.88 755.09 739.32 722.21 706.53 690.22 690.22 690.22

Tariff percent 6.5 6.4 6.3 6.0 5.9 5.7 5.7 5.7

Notes: The 6-year Uruguay Round implementation period ended in 2000. All parameters after JFY 2000 remain the same as levels set in 

JFY 2000. The standard import price is calculated as (gate price)*(1+(tariff/100)).

1 The tariff was suspended for August 1997 because of high pork prices in Japan (FAS GAIN report JA7026, 7/29/97).

Source: MAFF.

8 The Agreement on Safeguards is available at the WTO website:

http://www.wto.org/english/docs_e/legal_e/25-safeg.pdf

9 Article 5 can be read at the WTO website, in the Agreement on

Agriculture: http://www.wto.org/english/docs_e/legal_e/14-ag.pdf
an ordinary tariff status during the UR. The conversion

of pork from the variable levy system in place before

1995 to the gate price system in place after 1995 was

interpreted as such a conversion, and all tariff lines

covered by the gate price system were also designated

as subject to special safeguard protection.

The URAA special safeguard allows a country to raise

its tariffs if the volume of imports in a given period

exceeds 105 percent of the average volume recorded in

the same period over the previous 3 years, or if the

import price falls by more than 10 percent below the

1986-88 average reference price for the product. In the

case of volume surges, the tariff may be raised by up to

one-third above the tariff applied before the safeguard

takes effect. The tariff increase is then maintained for the

rest of the fiscal year, and is removed at the beginning of

the next fiscal year. If a price drop triggers the safeguard,

the tariff increase is related to the extent of the price

drop. Based on increased volume, Japan invoked the special safeguard for the period Jan. 1-March 31, 1997, and

raised the tariff on pork imports by 1.7 percentage

points, to 6.5 percent. In some subsequent years, imports

exceeded the trigger level, but did so late in the fiscal

year and tariff increases were not imposed. 

Raising Japan’s small ordinary tariff on pork (4.3 percent), as allowed under the special safeguard provision, is less serious than the action permitted under the

UR procedure applied only to Japan, the third kind of

mechanism to temporarily increase the import barrier:

“...if at the end of any of the first three quarters

of a JFY [Japan Fiscal Year], the quantity of

imports from the beginning of the JFY up to the

end of the relevant quarter of such products

exceeds 119 percent of the average quantity of

imports during the corresponding period in the

three preceding years for which data are available,

the Government of Japan may, for the remainder

of the JFY, apply”... a higher gate price.10

The gate price was raised in November 1995 using this

authority, when imports at the end of the first half

(April-September) of JFY1995 rose more than 19 percent over the average for the previous 3 years. At the end

of JFY1995 (March 31, 1996), the increase was removed

and the gate price fell to the level agreed in the UR.

However, pork imports in the first quarter of JFY1996

rose above the trigger, as imports that had been held

back (to await the lower gate price in effect on April 1,

1996) were added to normal flows, and as importers

anxious to avoid a future reimposition of the increase

sought to bring in imports earlier than they would have

otherwise. As a result, the gate price was raised again

July 1, 1996, for the remainder of JFY1996. The strategy

used by importers—to ship as much frozen pork as possible during quarters when the gate price was at normal

levels—had the perverse effect of making import volume

in such quarters trigger the gate price increase for the

rest of the fiscal year. Despite the higher gate price,

import volume was so strong that imports for the full fiscal year 1996 exceeded the trigger, and the increased

gate price was therefore also applied to the first quarter

of JFY1997. Unlike the URAA special safeguard, if

imports in a full year exceed the trigger level, the gate

price is raised in the first quarter of the next fiscal year.

Japan appeared to be in a near-permanent state of safeguard boosts to the gate price when the situation was

changed by an unforeseen external shock: Taiwan, the

largest exporter to Japan, suddenly had to end all

exports in March 1997 because of an outbreak of footand-mouth disease. Import volume was not again

strong enough to trigger the increases until July 2001.

Then, large imports in the first quarter of JFY2001

triggered higher gate prices through March 31, 2002.11

After the gate price increase was lifted on April 1,

2002, imports again exceeded the first-quarter trigger

level, and the gate price increase was reimposed on

August 1, 2002 (appendix table 2). Like the earlier

instances in 1995 and 1996, the gate price, and therefore the standard import price, was raised by about 25

percent as a result of the measures (fig. 5).

Sanitary rules. Japan became free of foot-and-mouth

disease (FMD) in 1907, and maintained that status

until a small outbreak occurred in Kyushu in 2000. To

prevent infection, Japan prohibits imports from countries which have FMD and from those which vaccinate

against it. This prohibition blocks imports from nearby

Asian countries and effectively limits pork imports to

those from North America, Oceania, or selected parts

of Europe. Taiwan lost its ability to export to Japan in

1997, and South Korea in 2000, because of FMD outbreaks. Japan also controls for other diseases, including African swine fever and hog cholera.

8 Economic Research Service, USDA

10 Unpublished notification to Mr. Craig Thorn, U.S. agricultural

counselor in Geneva, from Japan’s Mission to International

Organizations in Geneva, on Dec. 27, 1994. Page 3.

11 See Foreign Agricultural Service, USDA, International

Agricultural Trade Report, July 18, 2001, for more detailed analysis of this use of the safeguard. http://www.fas.usda.gov/dlp/highlights/2001/japansafeguard.pdf
Economic Research Service, USDA 9

Figure 5

Standard import price, April 1, 1994-September 1, 2002, including safeguard duties

Yen/kg

Source: FAS/Tokyo.

Quarter of fiscal year

Apr.-94–

Mar.-95

Apr.-

Sep. 02

Apr.-2000–

Mar.-01

Apr.-98–

Mar.-99

Apr.-96–

Mar.-97

1234123412341234123412341234123412

400

500

600

700

800
Producer prices. The ratio of farmgate hog prices in

Japan to those in the United States is roughly 2:1—the

farm price of a hog is twice as high in Japan as in the

United States.12 This implies that, with free competition

from imported pork, Japan’s farmers would be pressured to reduce their costs below current levels.

Several factors make producer prices for pork in Japan

higher than in the United States. Because Japan does

not produce grains or oilseeds that can provide animal

feed, it must import virtually all feedstuffs. Farmers

must pay the cost of transporting feed, usually across

the Pacific from North America. The added cost of

imported feedstuffs implies that animal production will

be at a higher cost in Japan than in those parts of the

world where livestock feed is locally abundant. In

addition, Japan’s labor costs are high relative to other

parts of the world. Nonagricultural industries and the

service sector compete with agriculture for labor, and

Japan’s restrictive immigration policies mean that farm

and meatpacking labor in general cannot be recruited

from nearby countries that have much lower wages.

Japan’s limited land base and dense population make it

difficult to raise large numbers of hogs in any given

area, and this makes the development of large-scale

slaughter and packing plants more difficult. 

Government policies have limited competition in

Japan’s market and led to prices being higher than they

would have been otherwise. Occasional government

programs to remove pork supplies from the market

(such as subsidizing frozen pork storage in 2001)

have, at the margin, led to higher market prices. More

serious impacts come from the gate price system. By

setting a minimum price for imports within Japan’s

market, the system forces pork prices up. Since trade

is in cuts of pork, rather than in carcasses, the gate

price affects the relative prices of cuts in Japan.

Lower-priced cuts are particularly affected. For

instance, hog bellies are usually priced below the gate

price on international markets. The domestic belly

price is higher in Japan as a result of the gate price

system, because imported bellies face the costs

imposed by the gate price system. Some higher-priced

cuts are sometimes priced high enough in the world

market that they exceed the gate price. This depends

on world prices, on the exchange rate for the yen, and

whether or not the safeguard mechanisms are in use.

For example, in 2001, the gate price was equivalent to

$1.97/lb for cuts, as opposed to $2.21/lb in 2000, with

the difference solely due to the depreciation of the yen

between the 2 years.

The average value of pork imports coming into Japan,

before any duties are applied, has been close to the standard import price (SIP) level (fig. 6). Importers balance

containers of pork with various cuts to have an average

value equal to the SIP, and thus avoid paying a duty

(except the 4.3 percent tariff). Both frozen and chilled

pork trade have import values close to the SIP.

However, this creates a situation unusual in world trade.

In the international market chilled (or fresh) meat typically receives a higher unit value than frozen meat.

Japan itself offers an example of a more normal situation—the average import value of chilled beef is significantly higher than the average import value of frozen

beef (fig. 7). Beef faces a simple tariff, without a gate

price system. 

10 Economic Research Service, USDA

Policy Implications

12 Comparison across countries of farm prices for hogs is difficult,

because data are gathered differently. The 2:1 ratio compares the

average price received by farmers in Japan, in yen/10 kg, live

weight (Ministry of Agriculture, Forestry and Fisheries, Monthly

Statistics), with the U.S. gross farm value of hogs per pound

(Economic Research Service), converted from a retail equivalent

weight basis. The OECD PSE market price support comparison

(fig. 3) shows that the average farmgate value of Japan’s pork production is twice as high as a U.S. wholesale price, plus transportation to Japan. This implies that Japanese farm values of pork are

more than twice as high as U.S. farm values.

Figure 6

Japan: Import unit values for pork

Yen/kg

Source: Japan trade statistics.

Frozen pork

Chilled pork

Average standard

import price

1994 96 98 2000

400

500

600

700

800
The gate price system for pork may skew the cuts or

qualities shipped as frozen imports. Importers able to

bring in frozen pork cuts that are priced lower in the

world market than Japan’s gate price have no incentive

to actually import a container load of the meat. After

clearing customs and paying the extra duty on the lowvalued frozen cuts, the lower-valued pork would have

the same cost to the firm as it sold the meat into

Japan’s market as higher-valued frozen cuts. They

could gain by importing higher-priced frozen pork

cuts. The higher-valued pork would likely get a better

price within Japan than the lower-valued pork, giving

the import firm an incentive to choose frozen cuts that

were priced close to the SIP level.

Consumer prices. Japan collects national average

retail prices for three cuts of pork from domestic animals: the shoulder, the loin, and the leg. The ratio of

pork cut prices in Japan (for domestic meat) to the

U.S. average retail price of all cuts varies from about

2:1 for the shoulder cut to about 3.5:1 for the loin cut.

While not precise, the price comparison shows that

even the lowest-priced cut, the shoulder, in Japan is

twice as expensive as the average price in the United

States. The ratio of Japan’s domestic loin price to the

U.S. price for center-cut pork chops has varied

between 2.5:1 and 3:1 in recent years.13

Japan also calculates national average prices for the

same three cuts of imported pork sold at retail in Japan.

The imported meat prices incorporate the costs of

transport from foreign sources to Japan, and also the

effects of the gate price system, which theoretically

raises the prices of lower-valued imported cuts. The

ratio of domestic to imported prices for the same cuts

(fig. 8) shows that domestic shoulder cuts are sold at

about a 12-percent premium to imported shoulder cuts;

and that domestic loins and legs have sold for about 28

percent more than imports over the last 8 years. These

premiums may reflect quality differences or consumers’ preferences for domestic pork. 

Economic Research Service, USDA 11

Figure 7

Japan: Import unit values for meats

Yen/kg

Source: Japan trade statistics.

1994 95 96 97 98 99 2000 01

0

100

200

300

400

500

600

700

800 Chilled pork

Chilled beef

Frozen beef

Frozen pork

13 Japanese price data are from the Agriculture & Livestock Industries

Corporation. U.S. data are from the Economic Research Service.

Figure 8

Price ratios: Domestic vs. imported retail prices

Ratio--imported price=1

Source: ALIC.

Loin

Leg

Shoulder

1993 95 97 99 2001

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50
Gains and losses. Higher prices for pork reduce consumption, at the margin, and contribute to higher food

expenditures for consumers who do buy pork. On the

other hand, farmers gain from higher prices for pork,

and Japan’s slaughter industry owes its existence to

domestic production of hogs.

If Japan were to eliminate its government support for

pork production, production would fall and imports

would rise to replace the lost production. Denmark, the

United States, and Canada are the principal pork

exporters to Japan. Greater imports by Japan would

have a small but positive impact on world prices.

Reduction of pork production in Japan would reduce

the use of corn and oilseed meal, and the imports that

supply them. However, feeding hogs for export to

Japan in supplying countries would increase the use of

feedstuffs in those countries that export. 

Some analyses have used global models to explore

what might happen to Japan’s pork market if government support for domestic production were reduced. A

major problem in such exercises is that the gate price

system makes it difficult to quantify Japan’s border

barriers facing imports. Pork is typically traded in the

form of specific cuts, and, within Japan and other

countries, pork prices vary substantially by cut. The

gate price system results in imports paying a 4.3-percent tariff. However, the impact of the gate price system on cuts is not just to raise their prices by 4.3 percent. Lower-valued cuts are imported into Japan

together with higher-valued ones, in order that the

average value be the gate price. Presumably, some of

the cuts would not be imported (at least at the same

time) if they weren’t needed to balance the load. This

imposes an implicit cost on importers that is very hard

to measure. The effective tariff on lower-valued cuts is

higher than 4.3 percent. The lack of transparency

caused by the gate price system makes modeling the

barriers hard. Using a 4.3-percent tariff understates

Japan’s protection. Using a higher, effective tariff

involves making assumptions that may not be valid. 

A recent modeling exercise by the Australian Bureau

of Agricultural and Resource Economics (ABARE)

examines Japan’s imports of pork and poultry meat

(combined) in the wake of a global liberalization by

means of a 50-percent cut in both border barriers and

domestic support in all countries, carried out over a 5-

year period. The value of the imports rises by 20 percent, mostly because of a 16-percent rise in import

volume.14 Aggregating poultry meat with pork, as

ABARE did, however, obscures the impact on pork.

An ERS model simulated the response after a few

years of adjustment if Japan were to eliminate all its

border protection and its trade-distorting domestic support for all commodities (but with the rest of the world

keeping current policies).15 The gate price system, as

explained above, makes it very hard to estimate an

average rate of protection for pork. Therefore, the ERS

model used a range of tariffs instead of directly modeling the gate price. Tariffs substituted for the gate price

(and the current 4.3-percent tariff) were 15 percent and

25 percent. 

If it is assumed that the impact of the gate price is

equivalent to a 15-percent tariff, the model showed

that reducing the tariff to 0 (and eliminating the

regional pork price stabilization program) would have

led to an 11-percent reduction in pork production and

would have left consumption almost unchanged (table

3). The reason for the lack of consumer increase in

response to the pork price drop was that the beef price

dropped by considerably more, and consumers purchased beef instead of pork. Using the assumption of a

25-percent tariff equivalent, and reducing it to zero,

pork production fell by 17 percent, and consumption

rose by nearly 2 percent. The net pork trade effects of

the various scenarios were a rise in Japan’s import

12 Economic Research Service, USDA

Table 3—Simulating removal of pork subsidies 

in Japan

Tariff equivalent of the present 

gate price system:

Percent

15 25

Change if the tariff

equivalent falls to 0:

Percent

Production -11.1 -16.9

Consumption -0.6 1.7

Import volume 13.2 26.3

World price 0.5 0.8

Import value 13.6 27.3

Source: ERS/Penn State Modeling Project.

14 Australian Bureau of Agricultural and Resource Economics,

2001.

15 Documentation of the model can be found at

http://coldfusion.aers.psu.edu/wto/ .
value by $420 million in the 15-percent scenario and a

rise in value by $840 million in the 25-percent scenario. In both scenarios, the primary factor increasing

trade was declining production in Japan.

Both the ABARE and ERS model results show that

Japan’s support to pork has a large impact on world

pork trade, as well as on consumer prices and domestic production in Japan. Japan’s own calculation of its

Aggregate Measurement of Support shows pork with

higher trade-distorting “amber-box” support than any

other commodity. Yet, the precision of these estimates

suffers from the lack of transparency imposed by the

gate price system. Current negotiations in the WTO

about a new multilateral agreement on agricultural

trade may lead to changes in Japan’s import regime,

with lower and more transparent trade barriers, and to

new disciplines on domestic support to hog farmers.

Such changes are likely to benefit Japan’s consumers

and foreign pork producers.

Economic Research Service, USDA 13
Agriculture & Livestock Industries Corporation.

Monthly Statistics. Various issues.

Australian Bureau of Agricultural and Resource

Economics. 2001. Agricultural Trade Policies in

Japan; The Need for Reform. Research report 01.5.

__________. 1988. Japanese Agricultural Policies; 

A Time for Change. Policy monograph no. 3. 

Bredahl, Maury E., Kent J. Sliffe, Michael Reed, and

Douglas Tvedt. September 1992. “Product Effects

of Trade Restrictions in the Japanese Pork Import

Market.” Pacific Rim Agriculture and Trade Report.

RS-92-2. Economic Research Service, USDA,

pp. 57-61.

Economic Research Service, USDA.

http://www.ers.usda.gov/Briefing/FoodPriceSpreads/

meatpricespreads/pork.htm, U.S. gross farm value.

ERS/Penn State Trade Modeling Project. http://coldfusion.aers.psu.edu/wto/

Fabiosa, Jacinto. August 2000. Welfare-Improving

Collusion in the Japanese Pork Import Market.

Center for Agricultural and Rural Development,

Iowa State University. Working Paper 00-WP248.

http://www.card.iastate.edu/publications/DBS/PDF

Files/00wp248.pdf

Foreign Agricultural Service, USDA. Livestock reports

in the GAIN series. http://www.fas.usda.gov/

scriptsw/attacherep/default.asp

__________. Production, Supply, and Distribution

database (PS&D). http://www.fas.usda.gov/

psd/Psdselection.asp

__________. Livestock Market Report: Japan’s

Safeguard on Pork Imports. International Agricultural

Trade Report, July 18, 2001. http://www.fas.

usda.gov/dlp/highlights/2001/japansafeguard.pdf

Huang, Sophia. October 2001. “Taiwan’s Hog

Industry—3 Years after Disease Outbreak.”

Agricultural Outlook. Economic Research Service,

USDA, pp. 20-23. http://www.ers.usda.gov/publications/agoutlook/oct2000/ao275h.pdf

Japan Tariff Association. 2002. Customs Tariff

Schedules of Japan.

__________. Japan Exports and Imports.

Ministry of Agriculture, Forestry and Fisheries.

Monthly Statistics of Agriculture, Forestry 

and Fisheries. 

__________. Statistical Yearbook of Agriculture,

Forestry and Fisheries.

National Agricultural Insurance Association, Planning

and Training Department. June 2001. The

Framework of Japan’s Agricultural Insurance

Scheme. Printed briefing.

Organization for Economic Cooperation and

Development. 2002. Agricultural Policies in OECD

Countries: Monitoring and Evaluation 2002.

World Trade Organization, Committee on Agriculture.

Notifications by Japan. G/AG/N/JPN/72. 

http://docsonline.wto.org/gen_search.asp

14 Economic Research Service, USDA

References
Economic Research Service, USDA 15

Appendix table 1—Japanese average pork carcass prices

JFY 1995 JFY 1996 JFY 1997 JFY 1998 JFY 1999 JFY 2000 JFY 2001

Yen per kilogram

Japan fiscal year (Apr. - Mar.)

Stabilization Price

Upper Price 525 515 510 505 495 485 480 

Lower Price 400 390 385 380 370 365 365 

Tokyo market

Excellent Grade 474 485 482 454 442 439 

Medium Grade 442 453 446 419 393 389 

Average Grade 400 408 406 378 346 335 

Osaka market

Excellent Grade 477 498 492 454 457 436 

Medium Grade 452 467 465 428 424 409 

Average Grade 388 395 413 364 354 345 

Source: Agriculture and Livestock Industries Corporation (ALIC).
16 Economic Research Service, USDA

Appendix table 2—Japanese pork safeguard trigger levels and results for JFY 1995 - JFY 2002

Metric tons

JFY 1995 Trigger Levels Qtr. Total Cum. Total Amount above or below trigger

I (Apr. - June) 146,965 142,727 142,727 -4,238

I - II (Apr. - Sep.) 286,215 158,424 301,151 14,936

SG triggered for Nov. 1, 1995 - Mar. 31, 1996

I - III (Apr. - Dec.) 440,494 168,540 469,691

I - IV (Apr. - Mar.) 567,029 66,856 536,547 -30,482

SSG 516,674 536,560 19,873

Note: SSG trigger level includes live pigs and pork meat.

JFY 1996 Trigger Levels Qtr. Total Cum. Total Amount above or below trigger

I (Apr. - June) 152,488 373,184 373,184 220,696

SG triggered for July 1, 1996 - Mar. 31, 1997

II (Apr. - Sep.) 311,736 97,842 471,026

III (Apr. - Dec.) 482,268 117,182 588,208

IV (Apr. - Mar.) 594,000 77,388 665,596 71,596

Annual SG triggered for Apr. 1, 1996 - June 30, 1997

SSG 537,199 665,635 128,436

SSG in effect from Jan. 1 - Mar. 31, 1997 

Note: Imports for April - May in 1996 surged as the SG in place since November 1,1995 was lifted March 31, 1996. 

JFY 1997 Trigger Levels Qtr. Total Cum. Total Amount above or below trigger

I (Apr. - June) 254,431 94,698 94,698 -159,733

I - II (Apr. - Sep.) 407,643 240,733 335,431 -72,212

I - III (Apr. - Dec.) 575,268 100,951 436,382 -138,886

I - IV (Apr. - Mar.) 677,074 83,593 519,975 -157,099

SSG 626,576 543,437 -83,139

Note: Largely owing to import ban imposed on Taiwan pork due to FMD outbreak in the spring, no SG triggered during July - Sept. 1997.

JFY 1998 Trigger Levels Qtr. Total Cum. Total Amount above or below trigger

I (Apr. - June) 242,209 131,498 131,498 -110,711

I - II (Apr. - Sep.) 439,345 138,937 270,435 -168,910

I - III (Apr. - Dec.) 592,726 153,000 423,435 -169,291

I - IV (Apr. - Mar.) 683,104 124,693 548,128 -134,976

SSG 612,854 548,167 -64,687

JFY 1999 Trigger Levels Qtr. Total Cum. Total Amount above or below trigger

I (Apr. - June) 237,754 183,694 183,694 -54,060

I - II (Apr. - Sep.) 427,168 147,952 331,646 -95,522

I - III (Apr. - Dec.) 574,385 146,149 477,795 -96,590

I - IV (Apr. - Mar.) 687,703 178,033 655,828 -31,875

SSG 591,350 665,870 74,520

JFY 2000 Trigger Levels Qtr. Total Cum. Total Amount above or below trigger

I (Apr. - June) 162,590 148,296 148,296 -14,294

I - II (Apr. - Sep.) 371,880 162,007 310,303 -61,577

I - III (Apr. - Dec.) 530,586 166,054 476,357 -54,229

I - IV (Apr. - Mar.) 683,826 177,997 654,354 -29,472

SSG 605,207 654,362 49,155

Note: Imports of Korean pork were terminated in early 2000 due to FMD outbreak.

JFY 2001 Trigger Levels Qtr. Total Cum. Total Amount above or below trigger

I (Apr. - June) 183,850 189,955 189,955 6,105

Pork SG triggered for Aug. 1, 2001 - Mar. 31, 2002

I - II (Apr. - Sep.) 361,914 160,077 350,032

I - III (Apr. - Dec.) 546,449 183,907 533,939

I - IV (Apr. - Mar.) 737,133 185,621 719,560 -17,573

SSG 636,373 709,308 72,935

Note: Imports of pork from several EU countries were terminated early 2001 due to FMD outbreak.

JFY 2002 Trigger Levels Qtr. Total Cum. Total Amount above or below trigger

I (Apr. - June) 207,038 218,151 218,151 11,113

Pork SG triggered for Aug. 1, 2002 - Mar. 31, 2003

I - II (Apr. - Sep.) 393,487 204,067 422,218

I - III (Apr. - Dec.) 590,281 NA NA NA

I - IV (Apr. - Mar.) 801,163 NA NA NA

SSG 715,971 NA

Notes: SG = safeguard provided for in side letter to the Uruguay Round Agreement on Agriculture (applies only to gate price).

SSG = special safeguard provided for in article 5 of the Uruguay Round Agreement on Agriculture (applies only to the tariff).

JFY = Japan fiscal year, from April 1 through the next March 31. For example, JFY 2002 is April 1, 2002-March 31, 2003.

FMD = foot-and-mouth disease.

Source: Ministry of Finance.

NA = not available.